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Essay / The development of IT function outsourcing
Once becoming popular, IT outsourcing remains a strong economic player with the enormous amount of revenue generated. Statista research highlights that IT outsourcing generated $52. 6 billion in 2016. While the trend showed a stable increase in income until 2012, reaching $62. 6 billion dollars, the expiration of previously signed huge contracts and their termination mainly due to quality issues (Deloitte, 2012) led to a drastic decrease in 2013 ($55.2 billion). Say no to plagiarism. Get a Custom Essay on “Why Violent Video Games Should Not Be Banned”? Get an original essay In one year, the numbers have gone in a different direction ($76.1 billion), however, concerns from companies over the outsourcing, as well as regulations and legislative changes imposed on outsourcing (Deloitte, 2014) have further changed the downward trend. Regardless of previous fluctuations in the amount of revenue generated by the sector, 2017 reveals increased enthusiasm for outsourcing IT functions. As for outsourcing software application development (which is the most revenue-generating sub-area), for example, the increase in The number of respondents who decided to transfer this activity to third-party providers is 12 %, increasing from 52% in 2016 to 64% in 2017 (Statista, 2017). The overall delta for the equal periods of 2016 and 2017 now remains +13%, forecasting a positive evolution in revenue generated. In addition to the absence of a stable trend in terms of revenue generated, the logic of subcontractors is also changing. Prior to 2013, cost reduction was the top motivator for the vast majority of Deloitte respondents, with 62% rating it as "very important" and an additional 25% saying it was "important" (Deloitte , 2012). However, the poor quality of the solutions proposed, as well as general dissatisfaction with the results, led to the termination of a large number of contracts and the transfer of activities in-house. For 2016, the situation has changed radically. Although cost reduction remains the key motivator for companies that decide to move towards outsourcing (59% of them consider this motivator to be “very important” or “important”), the factors Non-financials began to gain popularity. For example, 31% of respondents began to believe that outsourcing was about improving service quality, 28% found it crucial to have access to intellectual capital and proprietary expertise, and 17% even claimed that outsourcing led to transformational change for an organization (Deloitte, 2016). 35% of customers seek innovation by transferring work to another company, reporting a very positive attitude towards outsourcing development activities. However, a long list of problems is reported by subcontractors. And here a paradigm shift can also be detected. While in the 2012 study, 81% of dissatisfied respondents reported project management-related failures (52% were dissatisfied with underestimating scope/effort and 29% blamed vendors for delays in the schedule, which had a lot to do with the inability to deliver products/services on time and respond slowly to customer demands) (Deloitte, 2012), the situation in 2016 showed different attitudes. 46% of dissatisfied buyers say that suppliers.